153
South Korea’s Development
Assistance and Economic Outreach
Toward Southeast Asia
Kwak Sungil
154 | Joint U.S.-Korea Academic Studies
Recently South Korea has robustly increased its Official Development Assistance (ODA)
budget despite the global financial crisis of 2009. It has risen approximately nine times
from $0.21 billion in 2000 to $1.76 billion in 2013. Korea receives a great deal of attention
from practitioners and scholars as a model; it was a very poor recipient country in the 1950s
and 1960s and managed to become a rare case of successful economic development among
newly independent countries receiving ODA.
Explaining whether the purpose of aid centers on the donor’s interests or the recipient’s needs
may reflect the quality of aid. A few studies have explored the determinants of Korea’s ODA,
concluding that Korea is motivated by its own economic needs (thus Korea’s giving behavior
is in the donor’s best interest1 not the recipients’ needs). There has been a misunderstanding
of Korean ODA, which focuses on constructing infrastructure with tied aid. To dispel this
misunderstanding, I explore the direct relationship between Korean foreign direct investment
(FDI) and ODA as well as between bilateral trade volumes and ODA to Southeast Asia.
Since Southeast Asia is where many Korean firms and economic activities are located and
where a great share of ODA is sent, it provides a good test of the motivations behind ODA.
Moreover, considering that the Korean government increases the share of aid for trade, it
may be hard to say that Korean ODA only pursues economic interests because international
trade can stimulate the economic growth of developing countries.
I first present a brief history of Korea’s ODA and ODA policy and then provide an overview
of current Korean ODA. This is followed by a summary of the features of Korean ODA
for Southeast Asia. In the next section, I analyze the relationship between Korean ODA for
Southeast Asia and economic activities of Korea. Finally, I offer some concluding remarks
and discuss policy implications.
History of Korea’s ODA and ODA Policy
The Korean War devastated Korea, leaving it one of the poorest countries in the world. For
a time, the only source of capital was ODA. In the 1950s the main targets of assistance were
humanitarian relief and military support. In the 1960s a large influx of foreign investment
led to economic growth even as ODA continued. As a result, the economic structure of
Korea was dramatically transformed. The type of ODA to Korea was expanded from grants
for reconstruction to concessional loans, thus promoting industrial development. In the
1970s and 1980s, readjustment program loans or sector-wide loans contributed to reforming
the overall industrial structure. As the Korean economy was becoming more robust, ODA
sources became more diversified.
Korea became a donor in the 1960s. One step in that direction occurred in 1963, when
Korea hosted a U.S.-funded training program for public officials from developing countries.
In 1977, Korea provided $2 million in equipment from its own budget for the first time.
In 1987, it launched the Economic Development Cooperation Fund (EDCF), offering
concessional loans for developing countries. In 1991, Korea began to provide grants through
the establishment of the Korea International Cooperation Agency (KOICA). In 2000, it
was dropped from the DAC (Development Assistance Committee) list of ODA recipients.
Indeed, it was able to join the Organisation for Economic Co-operation and Development’s
(OECD) DAC as an international donor member in November 2009.
Kwak: South Korea’s Development Assistance | 155
Joining the DAC was a turning point in Korea’s ODA system. It enacted the Framework
Act on International Development Cooperation and devised the Strategic Plan for
International Development Cooperation2 and the mid-term ODA policy for 2011-2015.
Through these actions, Korea reviewed its entire ODA system and recognized the
need for an integrated strategy, and a coordinated, results-based management system.
Recognizing the problem of fragmentation in the ODA system, it sought to conduct ODA
in a harmonized manner among multiple agents and in recognition of various types of
ODA. To do so, the government established the Committee for International Development
Cooperation (CIDC) under the prime minister’s office. The government also prepared
Country Partnership Strategies (CPS) for selected priority partner countries. CPS provides
unitary guidance for all ODA executing ministries and agencies and serves as a basic
guideline for delivering aid to priority countries, for which two or three core sectors are
identified to “select and focus” principles to enhance aid effectiveness.3 Korea had two
unpublished lists of priority countries selected by KOICA and EDCF. Before joining the
DAC, the lists were integrated into a single list of 26 countries, as shown in Table 1. Five
countries in Southeast Asia are on this priority list. Grants and concessional loans are
concentrated in these countries.
The efforts above have surely improved the ODA system of Korea. However, there still exist
many limitations on the implementation of ODA by the agencies. This chapter identifies
specific characteristics and challenges in ODA for Southeast Asia and proposes steps that
could produce better results.
Table 1. Korea’s List of Priority Partner Countries
Asia and Commonwealth
of Independent States
• Azerbaijan
• Bangladesh
• Cambodia
• Indonesia
• Laos
• Mongolia
• Nepal
• Pakistan
• Philippines
• Solomon Islands
• Sri Lanka
• Timor Leste
• Uzbekistan
• Vietnam
Source: Park et al. (2013), p. 28.4
Africa
• Cameroon
• Democratic Republic
of Congo
• Ethiopia
• Ghana
• Mozambique
• Nigeria
• Rwanda
• Uganda
Latin America
• Bolivia
• Colombia
• Paraguay
• Peru
156 | Joint U.S.-Korea Academic Studies
Korea’s ODA System
Korea’s ODA institutional framework consists of a coordinating body, supervising
ministries, and executing ministries and agencies, as shown in Figure 1. There are still
unsolved questions within its internal structure, e.g., the widely-recognized problem of
fragmentation. To cope with this weakness, the MOSF (Ministry of Strategy and Finance)
and MOFA (Ministry of Foreign Affairs) co-chair the Inter-Agency EDCF Committee and
the Inter-Agency Grants Committee. In order to build a regional network and strengthen the
linkage between concessional loans and grants, the KOICA-EDCF Senior Officers’ Meeting
is held regularly.
The CIDC, as a coordinating body, deliberates and decides overall ODA policies for greater
policy coherence and systematic delivery of aid programs. MOSF and MOFA, which
supervise concessional loans and grants, respectively, draft the mid-term ODA policy and
the annual implementation plan, which are ultimately approved by the CIDC. KOICA and
the Korea Eximbank implement grant aid and concessional loans respectively, and other
ministries also play a role in the delivery of Korea’s ODA, especially for grant aid and
technical cooperation.
Kwak: South Korea’s Development Assistance | 157
Table 2. Overview of Korea’s Current ODA Provision (Unit: $ million, %)
2007
2008
2009
2010
2013
Growth
rate
Share
ODA
696
(53%)
802
(15%)
816
(2%)
1174 1325 1597 1755
(44%) (13%) (21%) (10%)
14.3%
100.0%
ODA/GNI (%)
0.07
0.09
0.1
0.12
-
-
Bilateral
Cooperation
491
(31%)
539
(10%)
581
(8%)
901
990 1183 1310
(55%) (10%) (19%) (11%)
13.3%
74.6%
Grants
358
(38%)
369
(3%)
367
(-1%)
574
(56%)
12.1%
(61.8%)
Concessional
Loans
132
(13%)
171
214
327
415
468
(30%) (25%) (53%) (27%) (13%)
501
(7%)
15.3%
(38.2%)
Multilateral
Cooperation
206
263
235
273
335
414
(161%) (28%) (-11%) (16%) (23%) (24%)
446
(8%)
17.8%
25.4%
2011
0.12
575
(0%)
2012
0.14
0.13
715
809
(24%) (13%)
Note: 1. Current amounts of disbursement.
2. Increasing rate year-on-year is presented in ( ).
3. Growth rate represents compound average growth rate from 2010 to 2013 after joining DAC.
4. The last column represents the share to total ODA.
Source: OECD QWIDS, http://stats.oecd.org/qwids/popularqueries.html
Overview of Korean ODA
Korea, as an emerging donor, has continuously increased the total amount of ODA in order
to contribute to the growth of developing countries. The amount has grown from $0.11
billion in 1991 to $1.75 billion in 2013 (Table 2). In particular, ODA soared in 2005 to $0.75
billion, 0.1 percent of the GNI. This sudden increase is attributed to support for the recovery
of postwar Afghanistan and Iraq. In 2006, ODA (disbursement) decreased by 39.5 percent
to $0.45 billion. In 2007, however, the amount grew by 52.8 percent to $0.69 billion, which
is 0.07 percent of the gross national income (GNI). This increase is attributed to an increase
in multilateral ODA through investment in the regional development bank. ODA grew by
15.2 percent in 2008. In 2009 it grew slightly by 1.7 percent to reach approximately $0.816
billion. The increase was due to the exchange rate applied,5 while the decrease had mainly
resulted from the reduction of investment in the Inter-American Development Bank (IDB).
Korea’s ODA in 2010 was $1.17 billion, which is attributed to an increase in disbursement
of bilateral concessional loans since 2006. In 2011, both bilateral concessional loans and
multilateral ODA support of the regional development bank and multilateral organizations
were the main contributors to the increase. In 2012 Korea’s ODA exceeded $1.5 billion for
the first time. The ODA to GNI ratio now stood at 0.14 percent.
In 2013, the figure had climbed to $1.75 billion, a 9.9 percent increase over 2012. Bilateral
and multilateral aid both rose. After these continuous increases, Korea ranked as the 16th
largest donor among the 27 members of the OECD DAC, followed by Belgium. The ODA to
GNI ratio (0.13 percent) had slightly declined, however, as the GNI increased by 15.9 percent
year-on-year due to a reform of the national account. Korea still has to increase its assistance,
given the fact that the average aid ratio for DAC members is 0.30 percent of GNI. The
158 | Joint U.S.-Korea Academic Studies
Table 3. Bilateral ODA Budget (Unit: $ million)
2012
2013
MOSF
594.9
643.4
MOFA
488.6
517.3
MEST
36.7
47.5
RDA
11.0
12.6
MFAFF
11.5
13.6
MHW
9.7
11.5
MOE
6.6
9.2
Etc.
42.1
40.9
Total
1,201.2
1,295.9
Source: Collaboration of listed Ministries.
Note: Ministry of Education, Science and Technology (MEST); Rural Development Administration
(RDA); Ministry for Food, Agriculture, Forestry and Fisheries (MFAFF), Ministry of Health
and Welfare (MHW), Ministry of Environment (MOE)
Kwak: South Korea’s Development Assistance | 159
government has a plan to narrow the gap and meet this responsibility to international society,6
as seen in the mid-term ODA policy for 2011-2015.7 In addition, the Korean government
has kept the ratio between bilateral and multilateral ODA (7:3) and between grants and
concessional loans (6:4) as “Strategies for Advancement of International Development
Cooperation” proposed in 2010. It is time to think about whether maintaining this ratio is
good for improving the effectiveness of ODA because the donor shopping phenomenon is
pervasive across recipient countries. As the amount of disbursement increases, the size of the
budget for ODA also increases. After joining the OECD DAC in 2010, the size of the budget
increased from $0.89 billion to $1.29 billion (grants $0.68 billion/concession loans $0.61
billion) in 2013. Most of the budget has been concentrated in MOSF/EDCF (40 percent)
and MOFA/KOICA (48 percent). Only five ministries had over $9 million of ODA in 2013.
Figure 3 and Table 4 show the geographic distribution of Korea’s bilateral ODA and top five
recipients. The largest share of aid goes to Asia, and increases over time. Korea’s economic
relationships are closest with recipients in Asia, where there are 14 priority partner countries,
especially in ASEAN with its growing demand for infrastructure. In addition, the Korean
government believes that its development experience is relevant for Asian recipient countries.
160 | Joint U.S.-Korea Academic Studies
Table 4. Top 5 Recipients of Korean Bilateral Aid (Unit: $ million)
Rank
2011
2013
Loans
Grants
Total
Loans
Grants
Total
1
Vietnam
(109.4)
Mongolia
(32.6)
Vietnam
(139.5)
Vietnam
(206.5)
Afghanistan
(122.4)
Vietnam
(242.5)
2
Bangladesh
(70.8)
Vietnam
(30.1)
Vietnam
(35.9)
Afghanistan
(122.4)
3
Cambodia
(39.1)
Afghanistan
(28.0)
Cambodia
(62.2)
Tanzania
(46.2)
Philippines
(33.2)
Cambodia
(63.8)
4
Sri Lanka
(31.9)
Philippines
(25.8)
Sri Lanka
(43.4)
Sri Lanka
(36.5)
Cambodia
(32.6)
Mozambique
(57.1)
5
Jordan
(26.9)
Cambodia
(23.1)
Philippines
(35.7)
Pakistan
(32.1)
Mongolia
(30.4)
Tanzania
(56.9)
Bangladesh Mozambique
(80.0)
(53.5)
Source: OECD QWIDS (http://stats.oecd.org/qwids/popularqueries.html).
The second largest group of recipient countries is located in Africa. Aid is still concentrated
in the Asia-Pacific region, but support for Africa reached more than 6 percent of total aid in
2005 and 21 percent of total aid in 2013. Korea continues to diversify the regional allocation
of aid. This change can be observed in Table 4. In 2011, the top five recipient countries were
in Asia, but Mozambique and Tanzania made this list in 2013. Considering grant provision
alone, Asian countries are still the only ones on this list.
Kwak: South Korea’s Development Assistance | 161
Table 5. Korea’s Loan to Grant Ratio (Unit: %)
(Loan/
grant)
2005
2006
2007
2008
2009
2010
2011
2012
2013
Total
45.6
45.2
36.9
46.3
58.3
57.0
72.2
65.5
61.9
Asia
97.0
47.6
55.4
55.9
78.0
76.1
107.1
87.4
77.9
Africa
0.0
0.0
0.0
0.0
0.0
37.6
47.1
90.5
102.2
Central
South
America
-25.0
1450.0
750.0
225.0
370.0
16.4
32.7
26.2
42.6
Middle
East
Asia
116.7
84.6
34.6
41.9
37.7
21.4
192.9
100.0
48.1
Europe
33.3
56.3
48.6
94.3
75.0
550.0
185.7
220.0
100.0
Oceania
14.9
10.8
1.4
36.4
0.0
0.0
-20.0
-25.0
-25.0
Source: OECD QWIDS (http://stats.oecd.org/qwids/popularqueries.html).
Concessional loans, as noted in Table 5, have continually garnered an increasing share of
total aid, from 45 percent in 2005 to 61.9 percent in 2013. For Asia, the percentages at first
glance do not seem to demonstrate an inverse-U shape. Until 2011, the figure increased, but
it has declined recently due to a growth in aid shopping by recipient countries in Southeast
Asia since they prefer grants to concessional loans. For Africa, the share of concessional
loans is much greater than that of grants because large infrastructure projects are being
delivered to that continent.
The Korean government allocates more than 70 percent of its aid to social and economic
infrastructure and services (Figure 4). The share of economic infrastructure and the services
sector noticeably increased after it joined OECD DAC in 2009, while the share of social
infrastructure and the services sector decreased until 2011. In 2012 the trends were reversed.
Aid for transportation and storage had the largest share of allocations (17.8 percent) in 2012.
Education was second. Table 6 shows that aid for social infrastructure was $0.56 billion,
while $0.31 billion was provided for economic infrastructure. Multisector and production
sector aid reached 9.8 percent and 8.1 percent, respectively, of total aid. Over 3 percent of
total aid went to support the rebuilding of Iraq before falling back to around 1 percent.
Aid allocation to less developed countries (LDCs) has dramatically increased from $89.83
million in 2006 to $494.96 million in 2013, a 5.5-fold increase. As of 2013, 30.8 percent of
Korea’s bilateral ODA was delivered to LDCs. The overall ODA volume for LDCs and other
low-income countries (OLICs) has been trending higher from 27.1 percent to 31.4 percent in
2013. In terms of absolute numbers, ODA volume for LDCs was the fastest-growing among
all income groups.
162 | Joint U.S.-Korea Academic Studies
Table 6. Aid Provision of Korea by Sector
Sector
Social SOC
Economic SOC
2012
Amount
Share
Amount
Share
Education
69.5
12.0%
205.0
17.3%
Health
91.0
15.7%
120.2
10.2%
Population
3.3
0.6%
7.3
0.6%
Water and Sanitation
41.3
7.1%
118.4
10.0%
Government and Civil Society
61.2
10.5%
90.7
7.7%
Other Social Infrastructure
and Services
7.1
1.2%
16.6
1.4%
Subtotal
273.5
47.1%
558.2
47.2%
Transport and Storage
77.4
13.3%
210.3
17.8%
Communication
59.5
10.2%
47.4
4.0%
Energy Generation and Supply
14.1
2.4%
48.0
4.1%
Banking and Financial Services
0.9
0.2%
1.5
0.1%
Business and Other Services
0.5
0.1%
1.6
0.1%
Subtotal
152.5
26.2%
308.8
26.1%
Production
59.9
10.3%
95.7
8.1%
Multisector/Cross-Cutting
37.6
6.5%
115.6
9.8%
Commodity Aid and General
Program Assistance
0.1
0.0%
2.0
0.2%
Action Relating to Debt
Etc.
2009
..
..
Humanitarian Aid
16.8
2.9%
16.4
1.4%
Administrative Cost of Donors
27.8
4.8%
59.4
5.0%
NGO Support
7.8
1.3%
1.2
0.1%
Unallocated
5.3
0.9%
26.0
2.2%
155.2
26.7%
316.2
26.7%
581.1
100%
1183.2
100%
Subtotal
Total
Source: KoreaExim Bank ODA Stat (net disbursement).
Kwak: South Korea’s Development Assistance | 163
Challenges of Korean ODA Provision
Although the total size of ODA has recently increased, it is small compared to other OECD
countries (Table 7); however, the average amount of each project-type assistance is greater
than that for other major donors except Belgium and the EU. This means that Korea still
prefers to show off by carrying forward big projects. It should concentrate on qualitative
indicators, not showy quantitative ones.
The Korean government should also clarify the objectives and raise public awareness of
ODA. According to a survey conducted by the Korea Institute for International Economic
Policy (KIEP) in 2014, 75.4 percent of the sample reported never having heard about
Millennium Development Goals, and 22.4 percent indicated that they had heard about them
but did not know exactly the content of these goals. Moreover, 78.6 percent reported that
they are not familiar with the fact that Korea is a member of the DAC.
164 | Joint U.S.-Korea Academic Studies
Table 7. Size of Project-Type Intervention by Korea (Unit: $ million, ea)
2010
Grant
total
Average
2012
Case
number
Grant total
Average
Case
number
Austria
51.85
0.36
144
40.16
0.28
143
Belgium
202.71
5.63
36
50.9
2.83
18
Denmark
842.24
1.56
540
644.4
1.33
484
330.7
1.35
245
330.06
1.39
238
1,770.53
1.46
1,216
2,080.96
1.41
1,475
Italy
122.24
0.12
998
179.63
0.16
1,113
Netherlands
564.28
0.64
876
1,009.21
2.65
381
Norway
892.56
0.82
1,089
860.7
0.75
1,146
7.83
0.07
113
France
Germany
Portugal
Sweden
609.27
1.42
430
576.72
1.12
515
Switzerland
336.74
0.56
604
352.31
0.46
759
1,142.27
0.57
1,994
1,304.97
0.48
2,738
215.56
0.35
611
129.39
0.3
431
0
0
1
United
Kingdom
Finland
Greece
Spain
1,537.88
0.24
6,418
537.44
0.17
3,104
Canada
378.71
0.36
1,051
369.7
0.51
729
United
States
19,334.09
1.3
14,901
12,924.25
1.11
11,635
Japan
3,652.30
0.5
7,265
3,508.94
0.28
12,408
Korea
435.44
4.44
98
154.74
2.54
61
Australia
293.09
1.05
278
New
Zealand
74.36
0.46
163
43.62
0.78
56
5,230.65
7.74
676
5,726.44
11.08
517
38,017.45
0.96
39,633
30,832.4
0.81
38,065
EU
Institutions
Total
Source: OECD QWIDS (http://stats.oecd.org/qwids/popularqueries.html).
Kwak: South Korea’s Development Assistance | 165
Table 8. Aid from Major Donors to Southeast Asia (2013) (Unit: $ million)
2013
US
Japan
Australia
Cambodia
76.92
141.49
71.95
Indonesia
152.16
-820.93
549.33
Laos
9.41
75.96
49.22
Myanmar
81.2
2,528.32
70.01
Philippines
154.2
-401.5
143.3
Thailand
56.84
-193.05
6.16
Timor-Leste
21.12
22.17
108.57
Vietnam
107.65
1,306.89
147.17
Total
659.5
2659.35
1145.71
(54.02)
(1077)
(170.8)
Standard Deviation
Note: Each number represents the amount of net disbursement in terms of 2013 current price.
Source: OECD QWIDS (http://stats.oecd.org/qwids/popularqueries.html).
Table 9. Official Development Assistance from Donors for Southeast Asia
(Unit: $ million)
2007
2008
2009
2010
2011
2012
2013
Cambodia
752.45
787.32
778.44
770.57
774.62
807.41
830.61
Indonesia
1,009.9
1,296.4
1,185.4
1,484.8
411.73
67.81
-107.4
Laos
451.59
524.62
457.94
437.55
382.26
408.92
435.53
Malaysia
287.06
180.45
155.74
0.17
31.23
15.37
-157
Myanmar
220.38
561.11
383.14
376.13
367.04
504.05
4,479.8
Philippines
745.61
15.06
366.99
552.88
-178.9
5.12
97.21
Thailand
-480.2
-784.3
-89.49
-14.28
-150.7
-134.8
-70.5
Timor-Leste
324.17
306.67
248.48
316.94
274.07
283.07
266.67
Vietnam
2,865.3
2,712
3,998.2
3,080.9
3,509.8
4,115.8
4,355.3
Total
6,176.3
5,599.3
7,484.9
7,005.7
5,421.2
6,072.7
10,130
Source: OECD QWIDS (http://stats.oecd.org/qwids/popularqueries.html).
Note: Each number represents the amount of net disbursement in terms of 2012 constant price.
166 | Joint U.S.-Korea Academic Studies
Table 10. Korea’s Aid Allocation by Country in Southeast Asia
(Unit: $ million, %)
Southeast
Asia
Year
2005
2006
2007
2008
2009
2010
2011
2012
2013
All
Recipients 788.57 444.18 649.67 868.88 980.62 1234.61 1315.14 1597.5 1685.12
(A)
Recipient
in Asia (B)
393
Cambodia
18.63
13.49
32.92
37.54
20.5
39.3
61.79
56.15
58.12
Indonesia
19.2
18.44
26.86
20.51
33.4
25.7
24.12
37.23
30.24
Laos
10.24
13.22
16.7
12.53
30.2
29.2
33.24
23.52
25.99
Malaysia
0.68
1.08
0.61
1.32
1.29
1.82
1.84
0.43
0.13
Myanmar
8.5
8.32
0.47
4.73
2.34
3.42
4.78
6.04
11.25
Philippines
7.88
6.89
26.28
22.92
26.5
31.1
35.44
31.33
41.03
Thailand
3.95
2.17
2.01
2
2.79
2.62
4.44
2.89
3.21
TimorLeste
0.31
0.56
1.27
2.36
2.13
1.91
6.97
7.55
3.46
Vietnam
16.03
9.83
23.02
57.64
69.1
101
138.5
200.3
225.2
Recipient
in
Southeast
Asia (C)
85.42
74
130.14
161.6
188
236
311.1
365.5
398.6
B/A
49.8%
50.0%
43.1%
35.1%
38.4%
50.0%
47.2%
42.6%
44.0%
C/A
10.8%
16.7%
20.0%
18.6%
19.2%
19.1%
23.7%
22.9%
23.7%
C/B
21.7%
33.3%
46.5%
53.0%
49.9%
38.2%
50.1%
53.8%
53.8%
222.06 279.98 304.73 376.69 617.77 620.69 679.92 740.83
Source: OECD QWIDS (http://stats.oecd.org/qwids/popularqueries.html).
Note: 1. Each number represents the amount of net disbursement in terms of 2012 constant price.
2. Recipient in Asia includes all countries located in the Middle East Asia, South and Central
Asia, and Far East Asia.
Kwak: South Korea’s Development Assistance | 167
In addition, to reduce the inefficiency of the dual-aid delivering agency system such as
KOICA and EDCF giving similar projects to the same recipient countries,8 the government
could establish a control tower with practical power to make separate agencies exchange
related information and link their projects.
ODA to Southeast Asia
Australia provides the largest amount of grants to Southeast Asian countries. Indonesia has
been the most favored recipient because it is important for their national security. Excluding
Indonesia, the standard deviation of Australian ODA to Southeast Asia countries is 51.2,
which is the smallest among the donor states of the United States, Japan, and Australia.
This indicates that Australia treats most recipients in Southeast Asia alike. As seen in Table
8, Japan selects a few targeted countries and provides the most resources to them. In 2013
Japan gave $2.5 billion to Myanmar and $1.3 billion to Vietnam. Japan was paid back by
Indonesia, Thailand, and the Philippines. Among the three donors, only Japan provided
concessional loans to the recipients, with Myanmar receiving $20.4 billion in 2013.
Because countries in Southeast Asia are at various stages of development, recipient countries
were given different amounts of ODA by donors (Table 9). We can observe that Indonesia,
Malaysia, and Thailand, as their income grew, paid back the concessional loans. Myanmar,
the largest emerging recipient in this region, was provided $4.48 billion in 2013—an
additional $3.96 billion more than the previous year, as the United States and the EU lifted
economic sanctions. The second largest recipient was Vietnam, which received $4.36 billion.
As it moved to successfully reform its economic and social systems, ODA to that nation
continually increased.
Table 10 represents Korea’s aid allocation by country in Southeast Asia. Korea has historically
had a close relationship with Asian countries given its cultural familiarity and geographic
proximity. Thus, approximately 50 percent of bilateral ODA was given to Asia after joining
DAC, though the figure was reduced to 44 percent in 2013. In that year approximately 23.75
percent of bilateral ODA (A) was provided only to Southeast Asian countries (C). Given that
bilateral ODA for the nine recipients in Southeast Asia soared from $85 million in 2005 to
$398 million in 2013, one can see that they were the major beneficiaries of Korea, garnering
more than half of Korea’s ODA in 2013.
Korea mostly provided experts and technical assistance type of ODA to Southeast Asia in 2013
due to the region’s increase in knowledge sharing programs.9 As seen in Table 11, Cambodia
and Vietnam received most funding for knowledge sharing programs. South Korea preferred
project-type interventions, which it has traditionally provided, but it rarely provided budget
support and pooled funds. In terms of amounts provided to recipients, however, project-type
intervention was dominant, as shown in Table 11. While the average value per instance of
experts and technical assistance was approximately $17,000, the average for projects was
around $1 million. The Korean government, because it has little experience in the provision of
various types of ODA, should investigate from the experience of other advanced donors which
type of provision is more effective in enhancing the wellbeing of people in recipient countries.
168 | Joint U.S.-Korea Academic Studies
Table 11. Korea’s Type of Aid to Southeast Asia (2013) (Unit: $ million, ea)
Core
Scholarships
contributions
Experts and student
and pooled
and other
costs in
Budget
programs
Project-type technical
donor
Support
and funds interventions assistance countries
Amt. Ea
Total
Amt.
Ea
Amt.
Ea
Amt.
Ea
Amt.
Ea
Amt.
Ea
Cambodia
0
1.551
5
51.49
62
9.51
736
1.28
20
63.85 823
Indonesia
0
0
0
31.29
53
7.26
378
0.60
16
39.17 447
Laos
0
0.385
3
19.66
29
5.79
307
1.28
12
27.12 351
Malaysia
0
0
0
0
0.09
11
0.04
4
0.139
15
Myanmar
0
0.046
1
10.05
36
4.28
202
0.41
11
14.8
250
Philippines
0
4.1
11
33.12
48
6.84
462
0.51
12
44.59 533
Thailand
0
0.046
1
0
3.19
122
0.10
7
3.34
130
TimorLeste
0
0
0
2.96
11
0.61
51
0.02
2
3.602
64
12.22 669
Vietnam
19.62 2
0.38
3
209.47
93
0.75
16
242.5 783
Total
19.62 2
6.51
24
358.06
332 49.83 2938 5.04
100
439.1 3396
Note: Each number of “Amt” represents the amount of disbursement in terms of current price. “EA”
represents the number of cases provided.
Source: OECD QWIDS (http://stats.oecd.org/qwids/popularqueries.html).
Korea provided 3,297 grants to recipient countries in Southeast Asia, as shown in Table
12. The average amount per grant was $49,000. Loans are distinct from grants. The loan
provisions, particularly investment-related loans to developing countries, have been related
to ODA “selection and focus principles.” As seen in column (3) of Table 12, South Korea
provided large investments to both Indonesia and Vietnam in 2013. Comparing the size of
concessional loans in column (2) with investments in (3), however, one can see that only
Vietnam received both in large amounts, even though both countries have strong economic
relationships with South Korea.
Table 13 shows the share of untied aid provided to Southeast Asian countries from donors.
Most advanced donors reported a relatively high share of untied aid to total over 75 percent.
Japan gave Myanmar a commitment of $4,862 million, 99 percent of it untied. In general,
Japan was notorious for providing large amounts of tied aid to promote its firms. Based on
Table 13, the share of its untied aid is much greater than other donors. South Korea still
provides a large amount of tied aid: only 52.6 percent of Korean aid to Southeast Asia was
untied in 2013. This is much lower than the figure for aid from Australia, which provided a
similar dollar amount of aid for this region.
Kwak: South Korea’s Development Assistance | 169
Table 12. Finance Type of Korea’s Aid and Investment to Southeast Asia
(2013) (Unit: $ million, ea)
Recipient
(1) Aid grant
excluding debt
reorganization
(2) Aid loan
excluding debt
reorganization
(3) Investmentrelated loan
to developing
countries
(4) Loan to
national private
investor
Total
Amount
Cases
77.2
3
Total
Amount
Cases
Total
Amount
Cases
Total
Amount
Cases
Cambodia
32.63
810
31.21
13
27.65
1
Indonesia
24.28
430
14.89
17
770.74
4
Laos
13.33
344
13.79
7
Malaysia
0.14
15
5
1
Myanmar
14.8
242
0
8
Philippines
33.36
522
11.22
11
23.2
2
Thailand
3.34
130
49.2
3
Timor-Leste
3.6
64
Vietnam
35.95
740
206.51
43
1,035.10
6
10.5
3
Total
161.44
3,297
277.62
99
1,910.89
17
87.7
6
Thailand
3.34
130
49.2
3
Timor-Leste
3.6
64
Vietnam
35.95
740
206.51
43
1,035.10
6
10.5
3
Total
161.44
3,297
277.62
99
1,910.89
17
87.7
6
Note: Each number represents the amount of gross disbursement in terms of current price.
Source: OECD QWIDS (http://stats.oecd.org/qwids/popularqueries.html).
In Southeast Asia, five types of financial assistance can be broadly distinguished: grants,
interest subsidies, loans, equity, and debt relief (Table 14). The largest share of financial
assistance is in the form of loans, which from all DAC donors total $8.04 billion. Japan
and Korea account for approximately 93 percent of the total loans in this region. Japan is
the largest provider of loans in Southeast Asia, and Korea is a far second in terms of size.
In addition, Japan and France provided approximately $3.7 billion in debt relief. Australia’s
grant-making was the largest, providing $1.18 billion for developing countries in Southeast
Asia. Following Australia, Japan and the United States provided $0.83 and $0.77 billion
dollars, respectively. Even though Korea’s total financial assistance to Southeast Asia was
the second largest, it provided a very negligible $0.16 billion in grants in contrast to $2.27
billion in loans.
170 | Joint U.S.-Korea Academic Studies
Table 13. Share of Untied Aid to Southeast Asia from Korea (2013)
(Unit: $ million, %)
Korea
Japan
Australia
Commit- Untied Commit- Untied Commitment
Share
ment
Share
ment
Untied
Share
United States
Commit- Untied
ment
Share
Cambodia
85.4
63.9%
245.2
79.7%
72.0
97.9%
73.2
71.4%
Indonesia
114.2
46.9%
606.9
81.7%
549.3
99.2%
689.2
89.9%
Laos
24.6
60.6%
160.2
75.8%
49.2
99.7%
8.4
70.8%
Malaysia
0.1
13.3%
11.1
6.3%
2.4
100.0%
4.0
72.6%
Myanmar
179.2
18.2%
4862.2
99.0%
70.0
98.3%
90.6
63.9%
Philippines
140.8
69.6%
865.0
17.4%
143.3
95.4%
190.3
55.8%
Thailand
3.3
18.5%
51.8
5.1%
6.2
100.0%
77.3
68.0%
Timor-Leste
12.5
92.8%
44.0
72.9%
108.6
98.4%
38.6
36.3%
Vietnam
264.6
64.3%
2432.8
75.9%
147.2
99.9%
107.7
61.1%
Total
824.7
52.8%
9279.2
82.5%
1148.1
98.6%
1279.3
76.3%
Source: OECD QWIDS (http://stats.oecd.org/qwids/popularqueries.html).
The purposes of assistance differ greatly, as seen in the comparison of Korea and Australia in
Table 15. Korea focused on industrial development and economic infrastructure, while Australia
concentrated on social infrastructure and multi-sector development. Korea’s provision of ODA
is much more likely to be directly related to economic activities than Australia’s. Most loans
from Korea are related to investment used for production sector development.
In 2013, about 24.6 percent of total bilateral ODA was targeted to economic infrastructure and
services development, with a sectoral focus on energy generation and supply (49.4 percent),
road transport (31 percent), and communications (16.4 percent) in Vietnam and Indonesia
(Table 16). In fact, the largest share of the total bilateral ODA provided to Southeast Asia
was intended for industrial development. About 93.4 percent of the total bilateral ODA was
targeted for this purpose in 2013. Only 4.5 percent of it was used for agricultural development
in 2013. The main recipient countries were Vietnam and Indonesia; both have strong economic
relationships with Korea.
Korea’s ODA and Economic Activities
in Southeast Asia
Comparing Korea’s ODA and FDI trends can provide insight regarding whether Korea’s aid
matches its economic interests. Figure 6 shows overall trends of Korea’s ODA and its FDI.
ODA is relatively steadily increasing, while FDI has variability. However, it appears that
both have strong, rising trends.
Kwak: South Korea’s Development Assistance | 171
Table 14. DAC Member’s Type of Financial Assistance in Southeast Asia
(Unit: $ million, %)
Donor
Australia
Grant
Interest
Subsidy
1186.0 24.33%
Loan
Equity
Debt Relief
20.1
0.25%
0.0
0.00%
8.5
0.22%
0.0
Austria
4.9
0.10%
6.3 30.61%
0.0
0.00%
0.00%
34.9
0.91%
Belgium
35.2
0.72%
2.8 13.67%
17.7
0.22% 10.6 16.90%
2.5
0.07%
Canada
140.2
2.88%
0.0
0.00%
0.0
0.00%
0.0
0.00%
Denmark
80.6
1.65%
0.0
0.00%
2.1
3.43%
52.6
1.37%
EU
Institutions
292.2
6.00%
20.0
0.25%
0.0
0.00%
0.0
0.00%
Finland
43.4
0.89%
0.0
0.00%
0.0
0.00%
0.0
0.00%
France
148.0
3.04%
252.5
3.14%
0.0
0.00%
588.6
15.3%
Germany
352.1
7.22%
140.1
1.74%
5.8
9.22%
0.0
0.00%
Greece
0.1
0.00%
0.0
0.00%
0.0
0.00%
0.0
0.00%
Ireland
24.8
0.51%
0.0
0.00%
0.0
0.00%
0.0
0.00%
Italy
12.5
0.26%
9.3
0.12%
0.0
0.00%
4.1
0.11%
Japan
828.0 16.99%
5295.5 65.87% 0.0
0.00%
Korea
161.4
3.31%
2276.2 28.31% 0.0
0.00%
0.0
0.00%
Luxembourg
33.4
0.68%
0.0
0.00%
0.0
0.00%
0.0
0.00%
Netherlands
51.3
1.05%
0.0
0.00%
0.0
0.00%
2.7
0.07%
New
Zealand
44.9
0.92%
0.0
0.00%
0.0
0.00%
0.0
0.00%
Norway
123.8
2.54%
0.0
0.00% 21.3 33.99%
0.0
0.00%
Portugal
17.7
0.36%
0.0
0.00%
0.0
0.00%
0.0
0.00%
Spain
18.2
0.37%
3.4
0.04%
0.0
0.00%
0.0
0.00%
Sweden
120.9
2.48%
0.0
0.00%
0.0
0.00%
0.0
0.00%
Switzerland
114.6
2.35%
0.0
0.00% 11.5 18.40%
0.0
0.00%
262.3
5.38%
0.0
0.00% 11.3 18.06%
42.2
1.09%
5.0
0.06%
4.4
0.11%
United
Kingdom
United
States
Total
0.8
7.8 37.68%
3.0 14.37%
777.1 15.94%
4873.7
3.66%
20.6
8039.8
0.0
62.6
0.00%
3110.7 80.7%
3851.1
Note: 1. Each number represents the amount of gross disbursement in terms of current price.
2. 0.0 indicates a small number.
3. Loans include concessional loans, investment-related loan, and so on.
Source: OECD QWIDS (http://stats.oecd.org/qwids/popularqueries.html).
172 | Joint U.S.-Korea Academic Studies
Table 15. Major Donors’ Allocation by Purpose in Southeast Asia (2013)
(Unit: $ million)
Japan
Action relating
to debt
Korea
3110.70
Administrative
cost of donors
Australia
France
United
States
DAC total
8.48
589.17
4.40
3851.68
0.00
12.17
7.77
0.77
1.28
2614.06
27.87
Commodity Aid
and General
Program
Assistance
2581.07
Economic
Infrastructure
2221.81
599.21
95.80
106.44
85.63
3348.97
Humanitarian Aid
153.19
7.19
90.21
2.60
102.13
688.06
Multi-sector/
Cross-cutting
95.89
9.57
231.57
22.26
25.11
494.39
Social
Infrastructure
621.60
178.98
620.40
148.25
443.12
2917.27
Unallocated
0.00
33.54
15.18
6.60
3.93
150.57
Environment
232.04
23.97
38.44
62.60
97.25
579.35
Production
217.89
1585.19
71.56
38.28
23.64
2140.45
Total
9234.20
2437.65
1179.39
989.15
786.49
16812.67
Note: Each number represents the amount of gross disbursement in terms of current price.
Source: OECD QWIDS (http://stats.oecd.org/qwids/popularqueries.html.
Among the priority partner countries of Korea,10 the level of correlation differs. First, for
Cambodia and Indonesia, Korea’s FDI and ODA are very weakly related, with correlations
respectively of 0.2208 and 0.2632. FDI to Laos and the Philippines recently recorded peaks
around $1 billion before falling, though Korea’s aid for Laos is a negligible $20-30 million.
With correlation coefficients of 0.6332 and 0.6160, respectively, they have a relatively strong
linear relationship. However, since the size of the ODA is small compared to the FDI, it is
hard to say that the ODA could have a strong relationship with the FDI. A unique case is
Vietnam; both series show increasing trends, and the size of aid and FDI are also large. The
correlation coefficient is 0.5202, which is not large. From these data, it is hard to observe that
all of Korea’s aid is given to satisfy economic interests, which could be represented by FDI.
Figure 7 shows the different aspects present in each trend.
Trade is another important economic indicator that is useful to explain the depth of bilateral
economic relationships (Table 17). In Cambodia and Vietnam, strong correlations between
Korea’s ODA and trade volume were found. Though Cambodia has a weak relationship with
Korea in terms of FDI, it has a relatively strong correlation of 0.819 between trade and given
Kwak: South Korea’s Development Assistance | 173
Table 16. Korea’s Allocation by Purpose (2013) (Unit: $ million)
Country
Economic
Infrastructure &
Services
Humanitarian
Aid
MultiSector
Social
Infrastructure &
Services
Unallocated
Environment
Production
Sector
Total
Cambodia
23.85
0.1
1.80
33.68
0.33
0.05
32.0
91.83
Indonesia
148.73
0.2
0.11
22.55
27.66
2.52
685.0
886.8
1.66
14.86
1.9
27.17
0
5.09
0.011
5.5
14.82
0.106
26.0
67.69
0.16
38.0
52.21
Laos
8.75
Malaysia
0.015
Myanmar
2.17
0.038
Philippines
21.92
6.79
Thailand
11.73
TimorLeste
0.52
0.077
5
1.08
5.47
0.53
1.19
11.66
2.31
0
1.06
1.86
0.064
0.1
3.61
21.04
796.0
1,288.0
23.97
1,584.5
2,437
Vietnam
381.51
0.054
2.65
86.48
Total
599.21
7.18
9.57
178.98
33.53
Note: Each number represents the amount of disbursement in terms of current price.
Source: OECD QWIDS (http://stats.oecd.org/qwids/popularqueries.html).
174 | Joint U.S.-Korea Academic Studies
Kwak: South Korea’s Development Assistance | 175
Table 17. Bilateral Trade Volume with Korea and ODA (Unit: $ million)
Cambodia
Indonesia
2008
236.6
37.5
2009
218.7
20.5
2010
272.6
39.3
22.2
25.7
132.2 29.2 6283.5 31.1 12849.9 101.0
2011
347.4
61.8
30383.7
24.1
158.8 33.2 6911.8 35.4 18042.7 138.5
2012
482.6
56.2
27019.9
37.2
176.4 23.5 7604.5 31.3 21116.2 200.3
2013
469.6
58.1
23014.8
30.2
199.5 26.0 7600.8 41.0
0.316
Trade ODA
Trade
ODA
Vietnam
ODA
0.819
ODA
Philippines
Trade
Correlation
Trade
Laos
Trade
ODA
106.1 12.5
9048.7
57.6
73.3
9054.1
69.1
30.2
0.115
0.484
0.980
Source: KITA Korea trade data (http://stat.kita.net/stat/istat/asean) and OECD QWIDS
(http://stats.oecd.org/qwids/popularqueries.html).
ODA. Vietnam also has a strong correlation of 0.98. Korea’s ODA decisions may be more
determined by the information about bilateral trade volume than about FDI. As the size of
FDI provided by South Korea is relatively small, the Korean government relies on the more
accessible information about bilateral trade volume.
This is the pattern we find for Southeast Asia. The ratio of total aid for trade to total bilateral
ODA remains around 0.35 to 0.40. Given that the Korean government increases the total
bilateral ODA by 15.6 percent per year on average, aid for trade has a similar annual growth
rate. The government focuses on support for transportation and storage, which are directly
related to international trade. Given that South Korea provided $1.32 billion for bilateral
ODA in 2013, about 40 percent of the total resources concentrated on aid for trade. Since
South Korea has experienced economic development through international trade, it is an
appropriate approach for it to provide aid for trade to developing countries.
Table 19 shows that the Korean government gives more aid for trade to LDCs and lower
middle income country groups than to other income groups. The amount for LDCs increased
about 2.5 times from 2009 to 2013. The average annual growth rate of total aid for trade was
16.5 percent, as the average annual growth rates for LDCs and LMICs were 26 percent and
20.8 percent respectively. The size of aid for trade to recipients in Southeast Asia increased
about 2.7 times from 2009 to 2013. Its share of overall aid for trade changed from 30.3
percent in 2009 to 45.1 percent in 2013. The share of aid for trade for Southeast Asia is
much greater than that for other regions. This may be related to the expansion of economic
relations, particularly in trade volume rather than investment.
As seen in Table 19, most ODA is classified as aid for trade. Table 20 shows key sectors of
Korean aid for trade to Southeast Asia. During the last five years the economic infrastructure
sector comprised 83.5 percent of Korean aid for trade, and building capacity for production,
especially in agriculture and fishing, had 11.7 percent. Most resources were used for
176 | Joint U.S.-Korea Academic Studies
Table 18. Korea’s Aid for Trade (Unit: $ million)
2009
2010
2011
2012
2013
CAGR
Transport & Storage
107.4
134.4
240.1
222.4
246.1
23.0%
Communications
76.8
70.9
44.8
52.3
43.7
-13.2%
Energy
22.7
73.3
40.5
54.2
104.0
46.3%
Banking & Financial Services
0.9
2.1
1.5
1.5
1.4
10.2%
Business & Other Services
0.7
2.5
1.9
1.6
3.1
47.3%
Agriculture, Forestry, Fishing
48.9
53.3
56.7
72.0
96.2
18.4%
Industry
14.4
10.2
10.5
14.1
16.2
3.0%
Mineral Resources & Mining
0.4
1.2
1.3
0.7
1.1
27.1%
Construction
0.2
2.0
1.8
1.5
1.5
67.6%
Trade Policies & Regulations
10.2
2.1
7.3
8.0
7.8
-6.5%
Tourism
0.4
0.3
0.4
1.2
1.0
24.3%
Total Aid for Trade (a)
283.0
352.4
406.7
429.5
522.0
16.5%
Total Bilateral ODA (b)
739.4
981.7
1026.9
1232.2
1320.0
15.6%
(a)/(b)
0.38
0.36
0.40
0.35
0.40
Note: Net disbursement in terms of 2012 constant price.
Source: OECD QWID(http://stats.oecd.org/qwids/popularqueries.html).
construction of road transport and Information and Communication Technology (ICT). In
order to contribute to economic development in developing countries in Southeast Asia,
Korean ODA has to focus on building their trade capacity as well as their hardware. Korea
has accumulated great experience in this sector, which is being shared with others. The role of
the private sector and external factors such as low oil prices in the 1980s were very important
in accomplishing economic growth in Korea, and it overcame many later difficulties such as
the economic crises in 1997 and 2008. Korean small and medium enterprises (SMEs) have
successfully been involved in global value chains (GVCs) relying on government support in
the 1980s and 1990s, an experience that can be transmitted to developing countries.
Conclusion
Although South Korea has a relatively short history as a donor, many foreign scholars
and practitioners are interested in its ODA since it has experience as a recipient country.
However, the literature of Korean ODA has been very limited because authors cannot access
information on Korean ODA. This chapter has explored Korea’s ODA system, in particular
its ODA to Southeast Asia. From the tables and figures describing its current ODA to this
region, we find the following three main characteristics: first, Korean aid focuses on building
Kwak: South Korea’s Development Assistance | 177
Table 19. Aid for Trade Activities of South Korea (Unit: $ million, %)
Aid for Trade by Income Groups
2009
2010
2011
2012
2013
LDCs
82.2
140.1
200.2
183
207.5
OLICs
1.5
4.7
1.9
2.7
2.6
LMICs
130.1
174.1
194
214.6
276.8
UMICst
59.4
31.1
19.6
18
23.4
MADCT
0
0
0
0
0
Part I Unallocated by income
9.8
2.3
4.6
11.1
11.7
Total Aid for Trade to all bilateral
recipients (a)
283
352.4
420.3
429.5
522
Recipients Only in Southeast Asia
Cambodia
8.7
21.7
35
21.7
26.8
Indonesia
17.7
13.9
9
14.4
12.8
Laos
5.4
5.6
10.5
7.9
10.2
Malaysia
0.2
0.3
0.3
0.2
0.1
Myanmar (Burma)
2.2
1.6
2.6
4.2
7.4
Philippines
24.1
25.9
25.2
19
23.8
Thailand
0.7
0.7
2.1
1.3
0.8
Timor-Leste
0.2
1.2
1.7
0.7
0.6
Vietnam
26.6
59.3
93.6
114.1
152.8
Total Aid for Trade to Southeast
Asian recipients (b)
85.9
130.2
180.1
183.4
235.2
30.30%
37.00%
42.80%
42.70%
45.10%
(b)/(a)
Note: 1. Following DAC list of recipients, LDCs, OLICs, LMICs, UMICs, and MADCT represent
Least Developed, Other Low Income, Low Middle Income, Upper Middle Income, More
Advanced Developing Countries and Territories respectively.
2. Net disbursement in terms of 2012 constant price.
3. Bold typed countries are Korea’s priority partners.
Source: OECD QWIDS (http://stats.oecd.org/qwids/popularqueries.html).
178 | Joint U.S.-Korea Academic Studies
Table 20. Key Sectors of Korean Aid for Trade to Southeast Asia
(Unit: $ million, %)
2009
2010
2011
2012
2013
Total
Transport & Storage
48.4
82.7
136.3
129.4
184.4
581.3
(71.3%)
Communications
22.4
17.1
11.6
16.5
8.9
76.6 (9.4%)
Energy
0.0
7.5
3.0
3.5
2.2
16.3 (2%)
Banking & Financial Services
0.6
1.3
0.7
0.7
0.4
3.6 (0.45%)
Business & Other Services
0.1
0.9
0.7
0.4
0.5
2.6 (0.32%)
Agriculture, Forestry,
Fishing
8.4
14.7
20.6
23.0
28.8
95.4 (11.7%)
Industry
5.7
4.6
5.5
7.5
8.3
31.6 (3.9%)
Mineral Resources & Mining
0.0
0.9
0.9
0.4
0.2
2.4 (0.29%)
Construction
0.0
0.2
0.2
0.2
0.3
0.8 (0.1%)
Trade Policies & Regulations
0.2
0.3
0.4
1.8
0.8
3.4 (0.42%)
Tourism
0.1
0.1
0.2
0.1
0.2
0.7 (0.08%)
85.9
130.2
180.1
183.4
235.2
814.8
(100%)
Total
Note: 1. Gross disbursement in terms of current prices.
2. The number in ( ) represents its share.
Source: OECD QWIDS (http://stats.oecd.org/qwids/popularqueries.html).
economic infrastructure and production capacity including industrial development, which
can be interpreted as aid for trade; second, relatively large project-type interventions were
preferred; third, the share of tied aid is greater than that for other donors.
Furthermore, Korean ODA is dramatically increasing. To fulfill its promise to the international
community to provide 0.25 percent of GNI to ODA, the Korean government has steadily
expanded the scale of ODA. It has learned from advanced donors how to provide more
effective international aid, but it is accused by the international community of only pursuing
its own economic interests. ODA for Southeast Asia, excluding Vietnam, has little correlation
with Korean investment decisions. Rather than investments, the amount of bilateral trade is a
key determinant of Korean ODA provisions. However, given the fact that international trade
can stimulate the economic growth of developing countries, it is not fair to say that Korean
ODA narrowly pursues economic interests because the government steadily increases the
share of aid for trade to Southeast Asia, as shown in Table 19. Moreover, Korean aid for trade
focuses on building economic infrastructure and production capacity.
Although Korean ODA provided to Southeast Asia still has weaknesses compared with
advanced donors’ ODA, Korea has made an effort to overcome them. First, the Korean
Kwak: South Korea’s Development Assistance | 179
government recognizes that support for humanitarian aid and cross-cutting purposes related
to the basic subsistence sectors have to expand more than before. Recognition of weaknesses
is a starting point to cure the problem. As developing countries in Southeast Asia achieve
economic growth, their needs change from satisfying subsistence needs to enjoying increased
well-being. Korean ODA should respond to these changes by supporting regional studies:
Even though Southeast Asia has geographic proximity and cultural ties with Korea, there are
few regional specialists on ASEAN.
Second, the Korean government also recognized that its ODA still has a large share of tied
aid, as seen in Table 13. This is seen as a tool for the economic interests of donors, not for the
reduction of poverty in recipient countries, because this form of aid limits accessibility for
local firms to participate in the production process. Therefore, Korea and recipient countries
have to think about a reasonable approach to make local SMEs involved in the production
process. Furthermore, this evolution can create jobs and contribute to the development of
recipient countries in Southeast Asia. In the near future, local firms may finally be involved
in global value chains (GVCs).
Third, public awareness of the objectives of ODA is very limited in Korea. Though this
problem does not directly affect Southeast Asia, it will determine the characteristics of
Korean ODA in the long run. The Korean government has to clarify all the procedures of
ODA and explain to its citizens the necessity of ODA for developing countries.
Endnotes
1.
Park Bok-young, “Gukje bigyo reul tonghan Hanguk ui wonjo mohyeong mosaek,” (paper
presented at ODA Watch Forum, 2007); Park Bok-young, “Wonjo mohyeong ui guke
bigyo-wa sisajeom,” (Seoul: KIEP, Research report 7-7, 2007); You Wong-Jo. “Hanguk
Gonjeokgaebalwonjo (ODA) Keongchaek-ui Seonggyeok-e-daehan Siljeung Bunseok,”
Segye Chiyok Yongu Nonchong, 29, No. 1 (2011), pp. 33-58; Koo and Kim, “Sehye Sahoewa Gongjeokgaebalwonjo: Hanguk ODA Gyeoljeong Yoin Bunseok, 1989-2007,” Han’guk
Sahoehak, Vol. 45, No. 1 (2011), pp. 153-90.
2.
This was devised at the 7th meeting of the Committee for International Development
Cooperation (CIDC) in October 2010 and clarified the basic framework: to take responsibility
as a member of the DAC; to fulfill its commitment of scaling up the ODA volume; and to
strengthen the integrated ODA system in accordance with the Framework Act.
3.
The CPS will be revised every three to five years for better alignment with the national
development plans of the partner country.
4.
Park Bok-young, Hong-shik Lee, and Koo Jeong-woo, “JoongJeom Heopryupkuk seonjeong
kijoon mit bangbeop e gwanhan yeongoo,” (Seoul: KIEP, ODA Jeongchaek report 13-03, 2013).
5.
In 2008, one U.S. dollar was equivalent to 1,110.1 won. In 2009, it was equivalent to 1,273.9 won.
6.
Currently, due to the long-lasting recession after 2008, the Korean government seems to be
fatigued from the continuous increases in ODA to fulfill its promise that it will provide 0.25
percent of GNI for ODA by 2015.
7.
An action plan specifies how to carry out the strategic plan for five years. It includes annual
ODA scaling-up targets and ODA allocation guidelines by region and by income group.
8.
Kang Young-Moon, “Hankuk ui ASEAN ODA wa tongsang jeongchaek e gwanhan yeongu,”
Gwanse HakheoJi, Vol. 14, No. 2 (2013), pp. 251-267.
9.
See Wonhyuk Lim’s chapter 9 on the Knowledge Sharing Program (KSP) in this publication.
10. Korea’s priority partner countries in Southeast Asia are Cambodia, Indonesia, Laos, the
Philippines, and Vietnam.